When Apple first announced this past week that its new flagship iPhone 5s features a dedicated M7 motion co-processor, industry watchers’ minds all jumped to the same place: this is the chip that will empower Apple’s upcoming “iWatch.” It seems inevitable, of course, but the M7 is something more much more than that — according to ABI Research analyst Patrick Connolly, in fact, Apple’s new chip represents the future of indoor location-based services.

“I am excited by the M7 co-processor which (with the exception of the Moto X) is the first high-profile handset, where the OEM has set aside embedded processing cores just for always-on motion detection/sensor fusion/indoor location/ambient intelligence,” Connolly wrote in a note on ABI’s blog. “There is much debate in the sensor industry about how best to cope with the rapidly increasing processing requirements of always on, particularly as companies like Movea, indoo.rs and senion labs looks to pull in increasing levels of complexity to improve performance.”

He continued, “Currently companies design to support a dedicated microprocessor/sensor hub or to utilize the host application processor. Assuming that other handsets will adopt a similar approach, this would not only answer this debate but also help to catalyze the industry, creating a processing platform capable of enabling the first true ambient intelligence applications.”

According to Connolly, the M7 and Apple’s recent related acquisitions are clear indications that the company intends to be a leader in “ubiquitous location and ambient intelligence.”